The entire news compilation has been comprehensively revised. More than 500,000 gold bars belonging to central banks and governments around the world are securely stored in the Federal Reserve’s vault in New York. Amid concerns over a potential second term for Donald Trump, European countries have expressed worries about the security and the possibility of repatriating their gold held in the United States. Germany, in particular, has demanded the return of approximately 1,200 tons of its gold, stating that such a move would enhance its strategic independence. Kathmandu.
Beneath Liberty Street in New York City, about 25 meters underground, lies a vault belonging to the US Federal Reserve—the nation’s central bank. Inside this vault, over 500,000 gold bars owned by central banks, governments, and institutions globally are stored. The storage is secured within a steel cylinder weighing about 90 tons, and once the vault is locked, its massive door cannot be reopened until the next day. This is the largest gold repository globally, containing gold bars with a combined weight of approximately 6,300 tons. The value of this gold exceeds one trillion dollars, amounting to roughly four percent of the US GDP.
This gold reserve plays a vital role in maintaining the stability of the global financial system, as numerous countries store their gold there. It helps to strengthen their currencies and serves as a final safe asset during economic crises. For decades, gold has been considered a secure investment during financial crises, inflation, and geopolitical instability, making it a primary holding for central banks worldwide, especially European banks. According to Barry Eichengreen, an expert at the University of California, Berkeley, this gold is among the most important assets because it enables countries to act as lenders of last resort to banks and corporations and to intervene in foreign exchange markets during difficult times.
Historically, European countries regarded the United States and the Federal Reserve as the most reliable custodians for their gold. During the Cold War, the threat posed by the Soviet Union made storing gold in America the safest option for European nations. However, following the potential return of Donald Trump for a second term, European leaders and experts have begun discussing the possibility of bringing their gold back from the New York vault. In recent months, growing differences between Trump and European allies have emerged on various issues, including international treaties, tariffs, Greenland’s status, and tensions with Iran. These disputes have heightened concerns about the security of European gold stored in the United States.
One reason European gold is stored in the US is because Russia typically keeps its gold domestically to avoid the impact of sanctions. Yet many European countries chose to hold their gold abroad, particularly in New York. Since the 1950s, European countries began depositing gold in the US. Barry Eichengreen explains that at the time, Europe heavily exported to the American market, receiving gold and dollars in return. Given the high cost of transporting gold, storing it in an accessible US location was deemed appropriate. Following the 1944 Bretton Woods Agreement, the dollar and gold became the most trusted assets. This system tied the dollar to gold at a fixed exchange rate, establishing both gold and the dollar as the most reliable currencies.
Post-war European nations, weakened by the conflict, took advantage of the opportunity to store their gold in the US without fees under the oversight of the American central bank. The Soviet threat then made US security guarantees highly reliable. Now, with the Soviet Union dissolved, the geopolitical landscape has changed. Still, since Trump’s initial term, US-European relations have been impacted, compromising decades-long close ties.
Germany, with the world’s second-largest gold reserves after the United States, is considered among the most sensitive countries regarding these risks, and voices calling for repatriation of its gold are increasing. According to Emanuel Munch, a leading economist and former lead researcher at Germany’s central bank, Bundesbank, Germany should demand the return of its approximately 1,200 tons of gold stored in New York, valued at nearly $200 billion. Repatriating the gold would grant Germany greater strategic independence. Given current geopolitical uncertainties, Munch argues, keeping such a large quantity of gold in the US is risky.
Michael Jäger, chairman of the German Taxpayers Association, warns that Trump is unpredictable and might take any measure to raise revenue, which means German gold may not be fully secure in the Federal Reserve’s vault. If disputes with the US increase, such as over Greenland, Bundesbank risks losing access to its gold, making it imperative to bring the reserves home, a concern echoed by German Chancellor and other political leaders.
Historically, Germany is not the only European country storing gold in New York. Italy and Switzerland also keep gold safely in the Fed’s vault, while the Netherlands reduced its gold holdings in New York from 51% in 2014 to 31%. During that period, Germany also repatriated some of its gold, but the majority remains in New York. According to Eichengreen, during the Greek debt and Eurozone crisis, European countries sought assurance that their currencies and bank deposits were backed by tangible assets.
In the 1960s, French President Charles de Gaulle withdrew his country’s gold from the Federal Reserve, fearing sudden devaluation of the dollar. His decision proved prescient when, in 1971, US President Richard Nixon terminated the dollar’s convertibility to gold. This move weakened the post-World War II international monetary system and sharply reduced the dollar value of gold stored in New York.
Currently, the amount of gold stored in New York has decreased compared to previous decades. In 1973, it exceeded 12,000 tons, roughly twice the current amount. Nonetheless, many European countries still prefer to keep their gold there. Experts caution that decisions to repatriate gold could have unforeseen consequences and potentially increase international tensions. Eichengreen notes that while such moves may not have a significant economic impact on the US, they could erode trust between the US and its allies.
Under American protection, European nations benefit from NATO’s security umbrella and the global role of the dollar—services that are effectively free. The current US administration, however, believes these services should not be provided without cost. If allies begin doubting the security of their assets in the US, it could undermine confidence in America, a critical factor for cooperation in sensitive regions like the Middle East.
As of now, no European country has formally decided to repatriate its gold holdings. Clemens Fuest of Germany’s IFO Institute for Economic Research warns that repatriation at this juncture could exacerbate tensions and lead to unpredictable outcomes. The growing questions about the Federal Reserve’s reliability as custodian of European gold risks further fracturing the longstanding global order.
